4. When it was presented and paid J. W. was not at all indebted to the company. The company was indebted to him in a sum more than sufficient to meet the cheque. 5. On April 25th, 1883, the company received from J. W. the sum of £2466 18s. 6d. on the terms that it should be applied in meeting the said cheque and certain other cheques. Bankruptcy (a). Action by Trustee in Bankruptcy for a Debt due to the Bankrupt. 1. The plaintiff is the trustee of the estate of G. K., who was on the of, 1883, adjudicated a bankrupt in the Croydon County Court. (a) Actions by trustees in bankruptcy.]-By the joint operation of the Property 44th, 50th and 54th sections of the Bankruptcy Act of 1883, all the pro- vested in perty of a bankrupt divisible among his creditors as defined by the 44th trustee. section, including choses in action, becomes absolutely vested in the trustee on his appointment. His title relates back to the act of bank- Relation ruptcy on which the receiving order was founded, or if there have been back of his several acts of bankruptcy within three months before the date of the title. presentation of the petition, then to the first of such acts. See s. 43 of the Bankruptcy Act, 1883. As to relation back in case of non-payment of debt under debtors' summons, for which a bankruptcy notice is now substituted, see Ex parte Weir, L. R. 6 Ch. 875. By sect. 50, par. 5, "Where any part of the property of the bankrupt consists of things in action, such things shall be deemed to have been duly assigned to the trustee." By s. 54, par. 2, "on the appointment of a trustee the property shall forthwith pass to and vest in the trustee appointed." # * Name in which the By sect. 83 the trustee may sue and be sued by the official name of "the trustee of the property of a bankrupt.' Under former bankruptcy statutes, it was held that where the appoint- trustee ment of an assignee was duly vacated, and a new assignee was ap- sues. pointed, the latter became assignee from the first appointment by relation. (Aldrett v. Kettridge, 1 Bing. 355.) There seems to be scarcely room for the application of this doctrine under the present law, as by the 54th section, sub-sect. 3, "the property of the bankrupt shall pass from trustee to trustee, including under that term the official receiver when he fills the office of trustee, and shall vest in the trustee for the time being during his continuance in office without any conveyance, assignment, or transfer whatever." A right of action to set aside an absolute conveyance and declare it a Interests mortgage (Seear v. Lawson, 15 Ch. Div. 426; 49 L. J. Bank. 69), and of the an option which the bankrupt has to take a lease, pass to his trustee. bankrupt (Buckland v. Papillon, L. R. 2 Ch. 67, and see Simpson v. Bathurst, that pass L. R. 5 Ch. 193, 202 ; 22 L. T. 29 ; 18 W. R. 772, as to the power of renew to the ing a lease vested in the bankrupt before adjudication.) And an assign- trustee. ment for value of the future receipts of the bankrupt's business does not Rights of action for breach of contract pass to trustee. When rights of action for tort pass to trustee. 2. Before the said date the said G. K. sold and delivered goods to the defendant, of which particulars have been delivered to the defendant, the price whereof amounted to £85. The plaintiff claims £85. prevent the trustee becoming entitled to them. Er parte Nicholls, 22 Ch. Div. 782. Where property was given to an uncertificated bankrupt contingently on his obtaining his certificate, this right was held to pass on the happening of that event to the assignee. (Davison v. Chalmers, 33 L. J. Ch. 622.) Though this case was decided under the Act of 1861, it would apply under the present Act. Money paid away for value by an uncertificated bankrupt cannot be followed by the trustee, though the payee had notice of the bankruptcy. (Ex parte Dewhurst, L. R. 7 Ch. 185; 41 L. J. Bank. 18; 25 L. T. 731; 20 W. R. 172.) Nor can it be intercepted if merely paid into the hands of a stakeholder, he and his principal having no notice of the bankruptcy. (Collins v. Steveson, 11 Q. B. D. 142.) All rights of action for breach of contract liquidated or not pass to the trustee. (Wright v. Fairfield, 2 B. & Ad. 727.) The right to enforce unexecuted contracts which may be performed by the trustee on behalf of the bankrupt, and such as would pass to his executor if he died, will pass to the trustee. (Gibson v. Carruthers, 8 M. & W. 333.) But semble if the contract be one with the bankrupt, his executors, and administrators, the right to complete it would not pass to the trustee (Knight v. Burgess, 33 L. J. Ch. 727), if the element of personal skill arises in such a case. Where the right of action of the bankrupt's wife is such that if vested in the bankrupt alone it would pass to the trustee, the interest of the bankrupt in such right of action passes to the trustee. (Richbell v. Alexander, 30 L. J. C. P. 268.) Since the Married Women's Property Act, 1882 (45 & 46 Vict. c. 75), such cases have become very rare. The right of action arising out of certain torts committed against the bankrupt before adjudication passes to the trustee; in other cases it does not; the test being, was the wrong one which was personal to the bankrupt, and for which he would be entitled to a remedy whether his property was impaired or not? in which case the cause of action does not pass to the trustee, but remains in the bankrupt. Or was a pecuniary loss and damage to the estate the substantial and primary cause of action? in which case it passes to the trustee, though involving personal inconvenience to the bankrupt. (Wetherell v. Julius, 10 C. B. 267.) Thus a right of action for trespass to a dwelling-house, and disturbing the bankrupt in the enjoyment of it by which he was prevented carrying on his business was hell not to pass to the assignee. The right of action for a wrongful dismissal passes to the trustee, and formerly did to the assignee (Beckham v. Drake, 2 H. L. C. 579). In the case of Wetherell v. Julius, supra, the distinction was drawn between a right of action against a solicitor for negligence occasioning the arrest of the bankrupt, and negligence leading to a sequestration of the profits of the bankrupt's benefice; in the former case the cause of action not devolving, but in the latter passing to the trustee. On the principle of this distinction it was held that an action for negligence against a solicitor, in consequence of which the client had a judgment passed against him, and was adjudicated bankrupt passed to the assignee. (Crawford v. Cinnamond, Ir. R. 1 C. L. 325, Ex.) So a right of action for misrepresentation whereby the plaintiff lost £2,000, and was in consequence adjudicated bankrupt, though involving personal annoyance, trouble, and discredit, was held to pass. (Hodgson v. Sydney, L. R. 1 Ex. 313.) In this case Lord Bram Action by Trustee in Liquidation. 1. A. M. and L. M. (hereinafter called the debtors) presented their petition in the London Bankruptcy Court for the liquida well suggested that the same tort may have two different characters, one giving the trustee a right of action on behalf of the estate, and the other giving the bankrupt a right of action on account of the personal injury. This it must be remembered is not a decision but only a dictum, and with the utmost deference for so high an authority there appear some practical difficulties in the way of applying such a doctrine. There is no analogy between such a case and one where a tort, such as a libel, is committed, affecting a number of persons, each of whom may claim damages, for here the injury is only committed against one person, and the suggestion is that you are to allow that person to be as it were multiplied for the purpose of creating separate torts. One of the most frequent subjects of controversy in suits for the deten- Order and tion or conversion of chattels, by as well as against the trustees of bank- disposition rupt estates is the "order and disposition clause" (sect. 44, sub-sect. 3, of clause. the Bankruptcy Act, 1883.) The subject is too large to be dealt with in a work of this scope, and, indeed, it scarcely comes within it. The law on the subject will be found very clearly and comprehensively stated in "Roche & Hazlitt's Bankruptcy Law." It is well, however, to notice that things in action other than debts due to the bankrupt in the course of his trade or business, are not goods and chattels within the meaning of that clause, which it may be stated relates to traders and nontraders. Shares in public companies are not choses in action for this purpose. (Er parte Union Bank of Manchester, L. R. 12 Eq. 354; 40 L. J. Bank. 57; 24 L. T. 951; 19 W. R. 872.) But a share in an ordinary partnership is such a chose in action (Ex parte Fletcher, 8 Ch. Div. 218; 26 W. R. 439; 47 L. J. Bank. 70; 38 L. T. 229); and so is a policy of insurance. (Ex parte Ibbetson, 8 Ch. Div. 519; 39 L. T. 1 ; 26 W. R. 843.) dealings of the bank. rupt. In certain transactions between the bankrupt and others, where the When the bankrupt disposes of goods, &c., after an act of bankruptcy has been trustee committed, the trustee has the option either of adopting the contract may affirm made by the bankrupt, and suing the party in an action ex contractu, or disaffirm or of disaffirming the contract, and suing the person dealing with the bankrupt for conversion or detinue. In such cases if the trustee adopts the transaction, he cannot afterwards treat the other party to the transaction as a wrongdoer. (Smith v. Baker, L. R. 8 C. P. 350; 42 L. J. C. P. 155; 28 L. T. 637; and see Marks v. Feldman, L. R. 5 Q. B. 275, Ex. Ch.; 39 L. T. Q. B. 101; 10 B. & S. 371.) Where there has been a collusive sale or transfer of goods by the bankrupt in contemplation of bankruptcy, there is no conversion without a demand and refusal, unless the sale amounts to an available act of bankruptcy, as the property is transferred subject to the transfer being avoided. (See Stevenson v. Newnham, 22 L. J. C. P. 110, Exch.) But if the goods have been converted into money an action for money had and received is maintainable by the trustee, without prior notice of the disaffirmance of the sale or transfer of the goods. (Heilbut v. Nevill, L. R. 5 C. P. 478, Exch.; 39 L. J. C. P. 245; 22 L. T. 662; 18 W. R. 898.) If the sale or transfer amount to an available act of bankruptcy, as a fraudulent preference (sect. 4, sub-sect. (c)), then immediately on the adjudication, it is avoided by reason of the relation back of the title of the trustee to the act of bankruptcy if within three months before the presentation of the petition; it is then a dealing with the property of the trustee, and absolutely void. But the right above referred to of disaffirming any prior Protected transactions. Rights of execution creditors. tion of their affairs by arrangement or composition with their creditors on the 2nd of December, 1882, and the plaintiff was appointed trustee of their estate. fraudulent preference is quite distinct from the right which he takes by virtue of the relation back of his title; in the former case the transaction standing good unless repudiated or disaffirmed, in the latter it being absolutely void. (See Heilbut v. Nevill, L. R. 4 C. P. 354, 359; Marks v. Feldman, L. R. 5 Q. B. 275, Exch.; 39 L. J. Q. B. 101; 10 B. & S. 371.) Although the assignment by a debtor of all his goods for a past debt is an act of bankruptcy, yet if there is no relation back to that act the trustee cannot, if there be no fraud in fact or any intention to prefer, disaffirm the transaction, or sue for the price of the goods if sold. (Jones v. Harber, L. R. 6 Q. B. 77; 40 L. J. Q. B. 59; 19 W. R. 248.) Subject to those provisions of the Bankruptcy Act, 1883, which avoided certain executions, settlements, and fraudulent preferences, the following transactions are protected by the Act, section 49: (a) Any payment by the bankrupt to any of his creditors. (c) Any conveyance or assignment by the bankrupt for valuable consideration. (d) Any contract, dealing, or transaction by or with the bankrupt for valuable consideration. Provided that both the following conditions are complied with, namely:1. The payment, delivery, conveyance, assignment, contract, dealing, or transaction, as the case may be, takes place before the date of the receiving order; and 2. The person (other than the debtor) to, by, or with whom the payment, delivery, conveyance, assignment, contract, dealing, or conveyance was made, executed, or entered into has not, at the time of the payment, delivery, conveyance, assignment, contract, dealing, or transaction, notice of any available act of bankruptcy committed by the bankrupt before that time. "Available act of bankruptcy." This would include an act only available by a particular person, e.g., failure to comply with a bankruptcy notice. Hood v. Newby, 21 Ch. Div. 605. "Notice" may be either express or implied, and notice of facts from which the commission of an act of bankruptcy could be reasonably inferred would be sufficient notice. (Lucas v. Dicker, 6 Q. B. D. 84; 54 L. J. Q. B. 190; 43 L. J. 429; 29 W. R. 115.) The effect of s. 49 is, in cases to which it applies, to limit the beginning of the trustee's title to the date of the receiving order, instead of to the act of bankruptcy, by relation back of his title, as in other cases. Much learning on the rights of execution creditors under the Bankruptcy Act, 1869, has been swept away by ss. 45 and 46 of the Bankruptcy Act, 1883, which makes it very difficult for an execution creditor to obtain a valid security. Elegits no longer extend to goods (Act of 1883, s. 146). Writs of levari facias are abolished (ibid.); and a sale of goods by the sheriff, under an execution, for an amount exceeding £20 must be public after four days' public advertisement of the sale, s. 145. A careful examination of s. 45, sub-sect. 2, will show that writs of elegit are still favoured by the law. A judgment creditor will still do well, where his debtor has real property, to issue his writ of elegit or, if the debtor's estate is equitable, to apply ex parte to a judge for the appointment of a receiver. S. 45 of the Bankruptcy Act, 1883, provides (1) Where a creditor has issued execution against the goods or lands of a debtor, or has attached any debt due to him, he shall not be entitled to retain the 2. In the years 1881 and 1882 the debtors lent money to the defendant and paid moneys for the defendant at his request, benefit of the execution or attachment against the trustee in bankruptcy of the debtor, unless he has completed the execution or the attachment before the date of the receiving order, and before notice of the presentation of any bankruptcy petition by or against the debtor, or of the commission of any available act of bankruptcy by the debtor. (2) For the purposes of this Act an execution against goods is completed Execution by seizure and sale; an attachment of a debt is completed by receipt when comof the debt; and an execution against land is completed by seizure, or pleted. in the case of an equitable interest, by the appointment of a receiver. And by s. 46, where the goods of a debtor are taken in execution, and, before the sale thereof, notice is served on the sheriff that a receiving order has been made against the debtor, the sheriff shall, on request, deliver the goods to the official receiver or trustee under the order, but the costs of the execution shall be a charge on the goods so delivered, and the official receiver or trustee may sell the goods or an adequate part thereof for the purpose of satisfying the charge. Where the goods of a debtor are sold under an execution in respect of a judgment for a sum exceeding £20, the sheriff shall deduct the costs of the execution from the proceeds of sale, and retain the balance for fourteen days, and if within that time notice is served on him of a bankruptcy petition having been presented against or by the debtor, and the debtor is adjudged bankrupt thereon, on any other petition of which the sheriff has notice, the sheriff shall pay the balance to the trustee in the bankruptcy, who shall be entitled to retain the same as against the execution creditor, but otherwise he shall deal with it as if no notice of the presentation of a bankruptcy petition had been served on him. An execution levied by seizure and sale on the goods of a debtor is not invalid by reason only of its being an act of bankruptcy, and a person who purchases the goods in good faith under a sale by the sheriff shall, in all cases, acquire a good title to them against the trustee in bankruptcy. An execution protected under these provisions may be an act of bankruptcy which may avoid a subsequent execution levied by the same creditor. (Ex parte Dawes, L.R. 19 Ex. 438; 44 L. J. Bk. 62; 32 L. T. 103; 23 W. R. 384.) Where the seizure and sale of the debtor's goods is prior to any act of bankruptcy to which there is relation, the right of the execution creditor to retain the fruits of the execution is not, under the Act (1883), in general affected by a subsequent act of bankruptcy followed by adjudication, for he is a creditor holding security, and there is nothing in this Act as in that of 1849 to avoid such security. (Slater v. Pinder, L. R. 7 Ex. 95; 41 L. J. Ex. 66; 26 L. T. 482; 20 W. R. 441, Ex. Ch.; and see Ex parte Rocke, L. R. 6 Ch. 795; 40 L. J. Bk. 70; 25 L. T. 287; 19 W. R. 1129; and Ex parte Lovering, L. R. 17 Eq. 452; 43 L. J. Bk. 58; 29 L. T. 897; 22 W. R. 365.) The fact of a seizure and a sale amounting to an act of bankruptcy under s. 4 of the Act does not affect the execution creditor's right under s. 45, unless the case falls within the 46th section. If it fall within that section the sheriff may still sell, and if he receives no notice within The rights fourteen days that a petition has been presented, he may pay the amount of an levied to the execution creditor, who is entitled to retain it unless he execution had notice of an act of bankruptcy prior to the seizure. (Ex parte creditor Villars, L. R. 9 Ch. 432; 43 L. J. Bk. 76; 30 L. T. 348; 22 W. R. 603.) as against A private sale by the debtor, being then in insolvent circumstances, to the trustee. the execution creditor of goods seized to avoid a sale by the sheriff, is a M |